Feds object to sale of nursing home chain, citing $1 million owed to taxpayers

By: - October 11, 2022 4:53 pm

QHC Humboldt-North is an Iowa care facility that owes the federal government $75,100 in unpaid fines. That's just a portion of the $1 million that the QHC Facilities chain owes, according to court records. (Photo via Google Earth)

The federal government is attempting to block the sale of Iowa’s bankrupt QHC nursing home chain, citing concerns that one element of the deal could shortchange taxpayers.

The Centers for Medicaid and Medicare Services, which helps regulate nursing homes, has told a bankruptcy judge that the proposal to sell the QHC Facilities chain contemplates the payment of only a portion of the $1 million that the chain still owes the federal government.

CMS is not opposed to the sale itself, but is objecting to that aspect of the sale. The federal agency is now asking the court to reject the proposed transfer of Medicare provider agreements for three QHC care facilities to the proposed buyer, Blue Diamond Equities. The agency is pointing out that the deal would result in QHC paying off only $509,000 to $739,600 of the $1 million owed to CMS.

That debt was closer to $2 million earlier this year, before three of QHC’s eight nursing homes were closed down, excluding them from the potential sale. QHC’s Mitchellville care facility, for example, owed CMS $385,708 earlier this year but is now closed and no longer considered part of the proposed sale. It’s not clear whether the Mitchellville home’s debt has been paid.

As part of the objection CMS filed last week with the court, the agency detailed the precise amounts that each of three QHC facilities still owes federal taxpayers:

Crestridge Care Center, Maquoketa: This facility owes $32,182 for COVID-19 Accelerated or Advanced Payments it collected two years ago.  Crestridge received a total of $60,814 in CAAP funds in April 2020, subject to a repayment schedule established by Congress. CMS was able to recover some of the payments by withholding a portion of the money owed to Crestridge for resident care, but a $32,182 balance remains.

QHC Fort Dodge Villa: This home owes a total of $935,705. The debt consists of $733,203 in unpaid fines that were imposed before QHC filed for bankruptcy late last year, plus $202,288 in unpaid fines imposed since that time, plus interest. Some of the unpaid fines date back to 2019. The fines include 37 separate penalties that CMS levied against Fort Dodge Villa for repeatedly failing to comply with COVID-19 reporting requirements.

QHC Humboldt-North: This care facility owes a total of $75,100 to CMS, which includes $57,600 in fines that were incurred in just the past 10 months while the bankruptcy case has proceeded. It also includes a $1,065 “daily fine” that CMS recently imposed on Humboldt-North for recent violations and each day it remained out of compliance with minimum standards. As of last week, that daily fine totaled $42,600 and was continuing to accrue as the home remained out of compliance.

In addition to the money that’s owed to federal taxpayers, state records show QHC owes the Iowa Department of Health and Human Services $3,930,784 in unpaid fees. With more than 300 other creditors lined up and seeking payment from QHC, the company has asked that its debt to the state be treated as a “lower priority.” The state of Iowa has not filed with the court any written objections to the planned sale of the QHC chain.

The eight skilled-nursing facilities owned by QHC when it first filed for bankruptcy are the Crestridge Care Center in Maquoketa; Crestview Acres in Marion; Sunnycrest Nursing Center in Dysart; QHC Fort Dodge Villa; QHC Humboldt North; QHC Humboldt South; QHC Mitchellville; and QHC Winterset North. QHC’s two assisted living centers are QHC Madison Square in Winterset and QHC Villa Cottages of Fort Dodge.

Collectively, the facilities have a maximum capacity of more than 700 residents, although the three facilities Blue Diamond plans to exclude from the sale — QHC Humboldt South, QHC Mitchellville and Sunnycrest Nursing Center — have closed in recent months.

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Clark Kauffman
Clark Kauffman

Deputy Editor Clark Kauffman has worked during the past 30 years as both an investigative reporter and editorial writer at two of Iowa’s largest newspapers, the Des Moines Register and the Quad-City Times. He has won numerous state and national awards for reporting and editorial writing.